الهيئة العامة للرقابة المالية

• The Authority has updated standards for registering validation and verification bodies (VVBs) to enhance their efficiency
• Allowing the registration of carbon reduction projects at FRA database prior to final validation report issuance

FRA Board of Directors Chaired by Dr. Mohamed Farid issued decrees no.  252 and 253 of 2024 to amend listing and delisting rules of carbon credits and the standards set for registering validation & verification bodies (VVB) at FRA’s database.

Decree No. 31 of 2024 has been amended to allow the registration of carbon reduction projects at FRA’s database even before the issuance of validation reports by VVB. However, companies must submit these validation reports to the Authority within a year of project registration, or the registration will be deemed invalid. FRA may grant extensions based on valid justifications.

This aims to encourage companies to reduce carbon emissions by issuing and trading carbon credits, enabling them to recoup some of their investments in low-carbon projects. By streamlining the process, the Authority seeks to increase the supply of carbon credits and enhance its ability to monitor and measure the carbon market.

The amendments require validation & verification bodies (VVB) to obtain ISO 14064-2:2019 certification for measuring, quantifying and reducing greenhouse gas emissions to enhance their capabilities and efficiency.

Additionally, Decree No. 163 of 2023 requires the applicant to be a legal entity and holds ISO/IEC 17029 or ISO 14065:2020 that include the general principles and requirements for bodies validating and verifying environmental information, that is besides ISO 14064-3 which provides a set of principles that ensure the validity and credibility of the GHG assertions.

To ensure the integrity of the verification and validation process, managing directors or their equivalent, along with relevant team members, must pass a competency assessment and interview conducted by Supervision and Control Committee for Carbon Emissions Reduction Units.

On the other hand, board members and verification/validation personnel must have clean criminal records, with no convictions for dishonesty, unless their reputation has been restored.

This follows the Authority’s issuance of listing and delisting rules for carbon credits in March. These comprehensive rules outline all the requirements and controls for registering reduction projects and listing of carbon credits, marking the first time such a framework has been introduced in the Egyptian market. This initiative is part of the Authority’s ongoing efforts to accelerate the launch of Egypt’s first carbon market.

Subsequently, in August, the Authority launched the first Voluntary Carbon Market in Egypt and Africa, regulated by capital market regulators. This event, attended by six ministers, marked a significant milestone in a journey that began with amendments to the Executive Regulations of the Capital Markets Law to introduce carbon credits as financial instruments. Then, a supervisory committee was established, resulting in the development of standards for registering validation & verification bodies (VVB). Three VVBs, including two local and one foreign, have been registered.

FRA prioritizes the activation of the carbon market to support Egypt’s carbon neutrality goals. This is the overarching goal that all countries are currently pursuing, aiming to provide a habitable planet by mitigating the severe negative impacts of rising global temperatures caused by carbon emissions, which lead to wildfires, floods and disruptions to business operation.